WASHINGTON -- Assets held by problem banks plummeted in the first half of the year while the Bank Insurance Fund grew 34% to $17.5 billion, the Federal Deposit Insurance Corp. said Tuesday.

The biggest chunk of that growth is the $2.8 billion commercial banks paid in premiums to the fund during the first half. The second-largest component is the $1.1 billion the FDIC stripped out of the fund's reserves for future losses.

With $17.2 billion, the Bank Insurance Fund has 92 cents for every $100 of insured deposits. Once the fund hits the congressionally mandated goal of 1.25%, the FDIC will be able to lower deposit insurance premiums.

Estimates Differ

The FDIC said Tuesday that it expects the fund will be rebuilt by 1996. Industry experts said recapitalization is likely to be complete next year.

"It looks increasingly as if they are going to hit the 1.25% by the middle of next year," said Bert Ely, an industry consultant.

The number of banks the FDIC considers troubled fell 113 to 361 from December 1993 to June 30. Even more startling, assets held by these banks plunged 80% to just $53 billion.

The $216 billion drop indicates that the FDIC peeled a couple of huge banks off the problem list, but the agency never confirms such information.

1994 Failures Cost $26M

In the first half, five banks with $559 million in assets failed. These failures cost the FDIC just $26 million, which means the agency's average loss is just over 4%. That is far below the agency's assumption that it will lose about 10% of a bank's assets when it fails.

This trickle of bank failures prodded the FDIC to trim its reserves for future losses by more than 60% in the first half. That reserve -- which was more than $16 billion in 1991 -- stands at just $1.9 billion now.

The FDIC sold off $5.3 billion in failed bank assets during the first six months of 1994, bringing the agency's inventory down to $19.9 billion.

Thrift Fund Needs Help

The Savings Association Insurance Fund grew 42% during the first half to $1.7 billion. But the thrift insurance fund has just less than a quarter for every $100 of insured deposits. SAIF also must meet the 1.25% target before thrift premiums can be lowered.

Because the bank and thrift insurance funds are on different timetables for meeting the 1.25% goal, banks and thrifts will soon be paying different prices for insurance.

This looming disparity has prompted the thrift industry to ask Congress to combine the two funds.

Banking trade groups have vowed to fight a merger as an unfair use of the industry's money.

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